Real estate bubble

A real estate bubble is a form of a speculative bubble. It comes on a regional and specific uses defined sub-segment of the property market to a significant overvaluation of real estate. Sooner or later the market reaches a peak; then drop the price. Most of them fall in a relatively short time strong ( demand falls, for example, because many potential buyers expect further declines in prices and / or because banks are no longer so generous as before granting loans; supply increases, for example, because the owner fear a slump and " cashing in " want before prices continue to fall ).

Historical housing bubbles

Causes of housing bubbles

Credit -induced housing bubbles

Credit -induced housing bubbles resulting from a significant expansion and / or cost reduction in the supply of real estate finance. The reasons for this are manifold. The effect is often due to a lack of market transparency or lack of regulation.

Through a clear and systematic expansion of lending even to borrowers with poor credit histories ( " subprime loans " ) creates a significant additional demand for real estate that meets on a limited range (due to the limitation of land resources ). This was the case in the U.S. until 2007. This results in the wake of the increasing demand to rising real estate prices. The same mechanism works with a significant the cost of borrowing, for example, by a decrease in interest rates. Each borrower can afford at a constant current load, in the episode " more " property. Again, the increased demand leads to rising real estate prices. If it fails, as happened in the U.S., at a meeting of such factors an intervention by the appropriate regulatory bodies, eg because the positive economic impact of strong house price increase is intended, and also lacks the counter-reaction of the market to the increasing demand for credit ( due to rising borrowing costs or interest), as a real estate bubble developed. There will be a self-sustaining development, as more and more demand ever higher prices justify.

Fiscal -induced housing bubbles

State intervention in the housing market, for example through special tax incentives, it can also lead to serious mistakes in the real estate market. Income state control policy and sluggish market development ( the construction of a property is regularly a project with significant runtime ) result in too late recognizable aberration.

Thus, in Germany after reunification significant investment in the new federal states, including office properties, induced. This was due to tax incentives for investors in the property market. This triggered a construction boom - hit a significantly low demand, so the price of the real estate crash sensitive - after several years of duration until completion of the building.

In connection with the introduction of the euro in 2002, tried in Spain numerous individuals and companies who "launder " dirty money in pesetas through real estate purchases to. This caused a rise in prices. In addition, the lending rates ( nominal interest rates and real interest rates ) decreased significantly. The market developed a momentum of its own, which did not stop until the summer of 2007.

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Many observers fear in China property bubble. In this country every year several ( ten? ) Cities built "on the green meadow " ( retort cities). Zheng Zhou New District is today a ghost town; well Kangbashi. Also in Anting there are high vacancy rates.

The well-known economist Daniel Roubini holds (as of 2013) " signs of overheating - if not properly continuous bubbles - Britain (more specifically on the real estate markets of Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand and once again: . recognizable London) [ for ] " in emerging countries, Roubini, " are distinguished from bubbles in Hong Kong, Singapore, China and Israel as well as in major urban centers of Turkey, India, Indonesia and Brazil. "